Your Directors are pleased to
present the 16th Annual Report alongwith audited Statement of
Accounts of the Company for the year ended 31st March 2004.

FINANCIAL RESULTS

2003-2004

(Rs. In lacs)

2002-2003

(Rs. In lacs)

Revenue from Operations
and other income

11500.66

11175.11

Profit before Interest,
Tax and Depreciation

5487.23

6477.57

Less : Interest and
Finance Charges

2658.59

3548.78

Less : Depreciation

2125.41

1773.79

Profit before Tax

703.22

1155.00

Less : Provision for Tax
(including deferred tax)

57.33

95.77

Profit after tax

645.89

1059.23

Less : Previous year
adjustments

---

17.28

Adjusted Net Profit

645.89

1041.95

Add : Surplus brought
forward from earlier years

4499.64

4582.69

Profit available for appropriation

5145.53

5624.64

Less : Appropriations

Transfer to capital redemption reserve

---

1000.00

Preference shares-Interim Dividend

---

125.00

Surplus carried to Balance Sheet

5145.53

4499.64

Revenue
from power supply and other income was at Rs.11500.66 Lacs as against Rs.
11175.11 lacs during the year 2002-03 and the Profit before tax and
depreciation stood at Rs. 5487.23 lacs as against Rs. 6477.57 lacs during the
previous year. The decrease in profit is mainly due to higher provisioning for
bad and doubtful debts.

OPERATIONS

The
operations of the company’s power plants at Adamtilla and Banskandi in Assam
and at Rajrappa and Gidi in Jharkhand were very good with plant load factor of
above 95% in the case of Assam power plants and above 80% in the case of Giddi
and Rajrappa plants. The operations of the Madhuband plant had stabilised
during the year, but from 4th February 2004 onwards the plant is
shutdown due to unforeseen damage to turbine. Reinstallation is in process and
the plant is expected to be re-commissioned by 15th September 2004.

All
efforts are being made for early realisation of outstanding payments from Assam
State Electricity Board and Coal India Limited.

BUSINESS OUTLOOK

The
Government of India has enacted the Electricity Act, 2003 in June 2003. This
new Act is likely to streamline, generation, transmission and distribution/
trading of power. The regulations for inter-state power trading and open access
to transmission and distribution facilities have been notified by the CERC,
which augurs well for your company.

To tap
the business opportunity, your company has altered the Main Object Clause of
the Memorandum of Association of the Company, which now also authorises your
company to carry the business of Inter State trading of Power. Your company has
also applied to Central Electricity Regulatory Commission for issue of license
for Inter / Intra state power trading which is in process for decision by the
Commission.

DIVIDEND

The
Directors, in order to conserve the resources for operational purposes, have
not recommended any dividend on the equity share capital.

Shri K.
K. Bhattacharya was appointed as the Additional Director of the Company with
effect from 19th December, 2003.It is recommended to appoint Sh. K. K. Bhattacharya as Director of the
Company Liable to retire by rotation.

AUDITORS

M/s S. S.
Kothari Mehta & Co., Chartered Accountants, New Delhi are eligible for
re-appointment as the Statutory Auditors of the Company from the conclusion of
the ensuing Annual General Meeting till the conclusion of the next Annual
General Meeting.The Board recommends
their appointment.

AUDITORS’ REPORT

The
observations of the auditors are self-explanatory and are adequately explained
in the notes to the accounts.

AUDIT COMMITTEE

TheAudit Committeecomprises of two Non-executive directors viz., Shri Ram Ganapati
and Shri A.S. Minocha, and the Managing Director, Shri R. S. Cheema. Shri Ram
Ganapati, Non Executive Independent Director is the Chairman of the Committee.
The Statutory Auditor, Internal Auditor, Director (Finance& Commercial), Director (Operations),
Sr. General Manager(Finance)were special invitees to the Meetings of the
Committee. The Company Secretary acts as Secretary of the Committee.

PUBLIC DEPOSITS

The
company has neither invited nor accepted any deposits from the public, within
the meaning of Section 58A of the Companies Act, 1956.

PARTICULARS OF EMPLOYEES

A
statement giving particulars of employees as per Section 217(2A) of the
Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975
as amended uptodate, is given in Annexure-A to this report.

The
company continued its drive for conservation of resources like fuel, water, gas
and Power. The Assam plants are being run in a combined cycle mode, thereby,
taking full advantage of the waste heat from the gas turbines and increasing
cycle efficiency. The Company has also been successful in using the low
calorific value rejects of coal washeries for production of electricity in
Rajrappa, Gidi & Madhuband power plants by using 'fluidised bed combustion'
technology. Certain actions have been taken for reduction in auxiliary power
consumption at the CIL Plants. The Company has not earned any foreign exchange
during the year. The total foreign exchange used during the year is Rs.110.82
lacs as against Rs. 257.77 Lacs during the year 2002-2003.

Form ‘A’
of the Annexure to the Companies (Disclosure of particulars in the Board of Directors
Report) Rules, 1988 is not applicable to the Company.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant
to Section 217(2AA) of the Companies Act,1956, your Directors confirm the
following :-

a)In the preparation of the Annual Accounts, the applicable
accounting standards have been followed.

b)selected such accounting policies and applied them
consistently and made judgements and estimates that are reasonable and prudent
so as to give a true and fair view of the state of affairs of the company at
the end of the financial year and of the profit or loss of the company for that
period.

c)Proper and sufficient care has been taken for the maintenance
of adequate accounting records in accordance with the provisions of Companies
Act for safeguarding the assets of the company and for preventing and detecting
fraud and other irregularities.

d)TheAnnual
Accountshave been prepared on a going
concern basis.

ACKNOWLEDGEMENT

Your
Directors wish to place on record their appreciation for the co-operation and
contributions made by the employees at all levels.

Your
Directors also take this opportunity for recording their appreciation for the
active support and help extended by the Government of India, Govt. of Assam,
Govt. of Jharkhand, Assam State Electricity Board, Coal India Limited and its
subsidiaries- Central Coalfields
Limited and Bharat Coking Coal limited, Financial Institutions, Banks and other
agencies and look forward to their continued support.

On behalf of the Board

Dated :August 12, 2004R.S.CheemaC.P.Poonacha

Place : New DelhiManaging DirectorDirector (Finance & Commercial)

ANNEXURE
‘A’

Statement showing the particulars of
employees pursuant to Section 217(2A) of the Companies (Particulars of
Employees) Rules, 1975 as amended upto date.

Annexed
to and forming part of the Director’s Report for the year ended 31st
March, 2004

Employed
throughout the year and in receipt of remuneration aggregating not less than
Rupees 2400000/- Per Annum

S.No.NameAgeDescriptions/QualificationsYear
ofGrossDate ofParticulars of last